self employment?

[flexjay87]

i am looking for advice from people who are self employed. particuarly those who are out on the road, like a plumber for example. if you made 40k as an employee,do you have to actually work a lot more to make up for incurred expenses, gasoline, insurance etc, or does the fact that the boss is not taking a big chunk make up the difference. is there some sort of formula to figure this out. do any expenses help make up for income fluctuations as far as taxes are concerned. seems to me doing work on the side might be the way to figure some of this out, although, working on weekends and weeknights is not that desirable after working all day during the week.(well if i was in my 20's i wouldn't care) also what about figuring out advertising, like what's most cost effective in relation to bang for the buck. i am sure i am forgetting to ask several pertinent questions, which is one of the reasons i am posting to begin with. thanks in advance for any advice.

 

[woody]

You don't have to 'work' a lot more... you just have to 'make' a lot more.

 

[ChiXJeff]

For starters, if you're going self-employed from a full time employee position, have at least 6 months of living expenses banked up.

I did the self-employment thing for a few months. Short story is if you were getting 40k as an employee, figure 80k self-employed. This will allow for taxes, health coverage, etc. Trust me, the health coverage will be $$$$. Note that this is for a unix geek, with pretty low overhead. As a general rule, guys in this field figure on 1,000 hours per year billable. The remainder will be used for finding new clients, writing invoices, professional improvement, etc.

If you're having to lay out cash for a truck, inventory, tools, etc., you'll have to significantly up your rates.

 

[8Mud]

I never had many real problems when I was out on my own. I did have a good book keeper to keep things tidy and keep me abreast of the tax changes. Made sure the bills were paid and the necessary paaperwork was in order.
I also kept a half years operating expenses in the bank. Things really seeemd to run hot and cold. Politics, the price and availabilty of gas, riots and a whole lot of unpredictable things seemed to pop up.
It was kind of a high energy undertaking for me, I was single and had an excess of energy to expend.
I work part time now, have a steady (if small) income and work for myself the rest of the time. Not really a business, as I'm liable to jump on any old job that seems interesting, anything from landscapping, through restuarant equipement repair, to renovations. I always seem to have more work than time, I refer a lot of jobs. But having a steady income, sure helps smooth out the bumps.
Low overhead and low stock are my watchwords. I try to only keep tools and transportation and don't order much shelf stock. I just keep a good selection of hardware and order the rest, by the job.
My son and his buddies are my labor pool and we work shares.
One other tip, if you get too successful, you get noticed and somebody with deeper pockets will try to muscle in. It is hard to carve out a nitch and make it stable, things are changing all the time.

 

[flexjay87]

well charging more per hour, or however you figure it may not be viable, since current local rates are maxed out as far as i am concerned. as far as health insurance is concerned, my wife has health insurance to cover me. i was hoping to work about the same amount, not counting time i would have to spend doing paperwork, parts, etc. hoping that since full payment is going to me, may off-set extra expenses. if i had to do it all over again, i would stay in sales, and not look back. may have to some day anyhow, who knows. seems like most of the guys i see around here who are self employed,(plumber, construction, whatever) are doing quite well. of course, there may be twice as many who are hurting! thanks for the input.......

 

[RichP]

First off you NEED to do a business plan, there are several sites out there that will walk you thru writing one. A business plan is not just for the bank, it will also give you an idea of what you can expect and what you need to shoot for.
You need to cultivate the local plumbing supply stores and let them know you are available, leave a stack of business cards up on the cork board, etc.
It is also a good idea to join your local chamber of commerce and make contacts, you never know when a member is going to build a strip mall and need a plumber...
Then you really need to get a copy of quickbooks professional or contractor and a totally seperate computer to run it on, one that you don't browse or get email on so that you will not get a virus on it.
You also need to find an accoutant who will help you setup quickbooks so that both of you are playing to the same sheet of music.
Next, you need to be listed in the yellow pages of your local phone company, nothing fancy, my listing, 5 or 6 lines costs me $29 a month.
Figure right off the bat that every $1 you make .30 cents goes to taxes, social security, etc....
I still have my business and it was just getting good when 6 other local swinging dicks decided they could do it to, I work a normal 40hr a week gig then put in another 4 hours a nite and a good chunk of sat's keeping my customers happy and they actually like that I come in after hours and don't interfere with day to day stuff by taking systems down for upgrades, maintenance, repairs and don't charge them extra for it
Out of the above mentioned six only two are left and they should be folding their tents soon.. one of them is running the snot out of his WJ doing house calls and putting probably 500 miles a week locally for peanuts....
One of my customers that has an 8 bay auto repair shop is building a new 18 bay garage and he's giving me an 12x24ft room with it's own front door which will give me a store front at which point my drop off repairs should increase dramatically..